Puerto Rico consumers could face an effective sales tax burden of about 12.7%, above the island’s 11.5% Sales and Use Tax (SUT), because businesses cannot recover the tax they pay on inputs and pass part of it on in prices, according to a study commissioned by the Foundation of the College of Authorized Public Accountants (CPA College). Economist Adrián Alós of Abexus, the firm that carried out the study, said about $1.72 billion, or 42.7% of total SUT collections, could be directly or indirectly tied to intermediate business purchases in 2025.
In a scenario where 75% of the SUT paid on intermediate purchases is transferred to final prices, about $1.29 billion would be folded into the cost of goods and services consumed in Puerto Rico, equivalent to roughly 1.2% of total personal consumption spending. Combined with the visible 11.5% SUT, that puts the effective burden near 12.7%.
Alós said information limits make it impossible to determine precisely how much of the tax is passed on and how much companies absorb through lower margins, cost adjustments, pay changes, reduced investment or process modifications. The study also projects a loss of 213,000 jobs by 2045 and about $843 million a year in combined income tax and SUT collections, in 2025 dollars, if falling births and population aging continue.
Gerardo Torres, president of the CPA College, said the findings reinforce the need to evaluate the system comprehensively.